Caterpillar Inc. (CAT) posted its strongest quarter ever Thursday, yielding record annual profits and revenues that the leading heavy equipment maker says will continue to rise in 2006.

Peoria-based Caterpillar reported fourth-quarter earnings surged 54 percent to $846 million, up from $551 million during the same period a year ago. Profit per share was $1.20 for the quarter, up from 78 cents from a year ago and ahead of the estimate of $1.10 per share by analysts surveyed by Thomson Financial.

Caterpillar shares rose 93 cents, or 1.5 percent, to $63 in early trading Thursday on the New York Stock Exchange.

Revenues for the quarter that ended Dec. 31 rose 13 percent from $8.57 billion a year ago to $9.66 billion in 2005.

For the year, Caterpillar profits topped $2.8 billion, up 40 percent from about $2 billion in 2004. Profit per share jumped from $2.84 in 2003 to $4.04 last year, beating Wall Street's estimate of $3.94 per share. Full-year revenues climbed 20 percent, from $30.2 billion to $36.3 billion.

The company reported record machinery sales that rose 22 percent from 2004, with a 17 percent increase in engine sales. Caterpillar said price increases helped offset higher operating costs driven by unprecedented demand.

Caterpillar chairman and chief executive officer Jim Owens said in a statement that "2005 was an incredibly strong year for us. With the surge in customer demand and production, our employers, suppliers and dealers have responded in spectacular fashion to help us realize the opportunity."

Caterpillar boosted its 2006 earnings outlook, predicting profit per share of $4.65 to $5, up from earlier estimates of $4.52 to $4.91 per share. The company's sales outlook remains unchanged at $40 billion, up about 10 percent from 2005.

Owens said 2006 "should be another year of excellent growth for Caterpillar. Most of the industries we serve are strong and the fundamental economic picture remains positive."

Caterpillar designs and manufactures mining, construction and agricultural machines, as well as engines for earth moving and construction equipment. It also is the world's leading manufacturer of electrical generators.